IIRC, Redsn0w is better for iTouch. However, I have jailbroken my cousin's iTouch with QuickPwn with no problems, and it worked just fine.

Yes, you can still install and update apps once you have your iTouch jailbroken. What you should prevent of doing is to update the OS itself when 3.0 comes out. Most of the time you should avoid it when in a iPhone 3G phone, but still, wait for an answer from the dev team before you install the 3.0 update in your device.

Is there a way I can prevent it from freezing when I try and Jailbreak it?I tried earlier and it froze at the pineapple boot screen.I then had to DFU it and restore my thing completely.Took a few hours.